This article was first published in the June 2016 issue of WIRED magazine. Be the first to read WIRED's articles in print before they're posted online, and get your hands on loads of additional content by subscribing online. For more stories from WIRED's mission-driven businesses package, click here.
Mike was a top executive in Silicon Valley and attracting him to peer-to-peer online lending firm Kiva, where I'm executive chair, was a long shot. It meant enticing him to walk away from a high-profile position and to take a massive pay cut.
Which is why I was both thrilled and stunned when he took the job. But it was what he said when he joined Kiva that really got my attention: what counted most was work that actually mattered.
Far from being the exception, Mike became the norm. I've mentored dozens of rising stars in Silicon Valley who have turned down or left high-paying jobs for positions that paid less and were more uncertain. They made the move because they wanted a shot at changing the world and work that was worthy of their lives.
Isn't making a business succeed hard enough on its own? Why saddle it with lofty aspirations of changing the world, social responsibility, environmental stewardship, employee satisfaction, community and other niceties that are ancillary and not directly tied to the bottom line? Nobel Prize-winning economist Milton Friedman argued that "there is one and only one social responsibility of business - to use its resources and engage in activities designed to increase its profits."
The compellingly simple algorithm of maximising profits and shareholder value has become conventional wisdom ever since. Full stop. As the time-horizon for measuring profits has shrunk to a myopic focus on quarterly earnings, the modern interpretation of Friedman's theory is one he himself might not recognise.
Were he alive, what might Friedman say about the widening gap between his theory and a reality that includes a global economy brought to its knees by short-term profit maximisation that enriches shareholders to the exclusion of any other group, extracting more value from the economy than it creates?
While appealing in its simplicity, short-term profit maximisation has been mistakenly equated with creating shareholder value and often comes at the expense of sustainable value creation for shareholders and stakeholders alike. In February 2016, BlackRock CEO Larry Fink, the world's largest investor with $4.6 trillion in assets, called out the short-termism bug in this prevailing algorithm. He declared that "Today's culture of quarterly earnings hysteria is totally contrary to the long-term approach we need." The global economic crisis of 2008, a sluggish recovery since, pollution, an escalating climate crisis and growing income inequality are ubiquitous and undeniable evidence that the pursuit of profit maximisation at any cost has come at a great cost to the planet and to our humanity.
Millennials are the canaries in the coal mine for much of what ails our way of life and work. Saddled with student debt, they are unable to find work at twice the rate of those over 30 years old; twice as many live in poverty as in the 70s. The unstable nature of the world they are inheriting - and the knowledge that many of them will not share the opportunities their parents had - has led them towards an existential crisis. In the UK, millennials' average disposable income is just a third of that of pensioners, with home ownership a distant dream.
As a result, millennials are making explicit our universal hunger and innate desire to contribute to something bigger than ourselves. The most socially and environmentally conscious generation ever, they have become humanity's conscience and self-correcting mechanism. They insist on a purposeful connection with companies they buy from, work for and invest in. They want to know why a business exists, what it does, how it treats people and the planet.
Nine out of ten believe that success should be measured by more than financial performance. For them, the idea of going to work with the singular goal of maximising profits and shareholder value is pointless and abhorrent. They're willing to put their money where their mouth is: more than half of millennials have ruled out working for an organisation because of its values or standard of conduct. More than half have "chosen not to undertake a task at work because it went against their personal values or ethics", according to a 2016 Deloitte survey. That's a big deal, because they've surpassed the baby boomer generation in size and are expected to own $41 trillion in transferred wealth.
They are shaking up the way companies do business, and speaking up about the way we're working, when it's not working. A 2013 Gallup poll across 142 countries discovered that only 13 per cent of employees are "engaged". In the UK, it's 17 per cent - a staggering revelation that work is a dispiriting experience for most of us.
And yet, increasing meaning at work remains one of the most potent - and underutilised - ways to increase productivity, engagement, and performance. According to The Energy Project, a consultancy that counts Google among its clients, employees are more than three times as likely to stay in a job, are twice as happy and are more energised when their work is meaningful.
It would be easy to dismiss this as the naïve ideology of youth, were it not for the fact that many of the world's most successful, admired and enduring companies are purpose-driven. Contrary to conventional wisdom that purpose is a tax on the bottom line, companies such as Dannon Group, Patagonia, Virgin, Starbucks, Southwest Airlines and Whole Foods are demonstrating that purpose-driven enterprises have an inherent market and profit advantage giving them staying power. In Silicon Valley we often talk about mission-driven versus mercenary-driven companies, acknowledging that both can be financially successful. We also know that mission-driven companies that walk the talk tend to be better places to work, breeding an intense sense of loyalty with employees and customers. Conversely, those which style themselves as mission-driven by merely talking the talk leave a trail of cynicism and mistrust in their wake.
The best entrepreneurs I know are the world's greatest change agents precisely because they share a native belief that the fundamental purpose of business is purpose. They view profit as essential oxygen to a company's ability to survive and thrive, and the fuel that maximises their impact. As Kickstarter co-founder and CEO Yancey Strickler puts it, "That's so obvious, it's not even a thought. It's how you find long-term success."
"If someone gives you a day and tells you to go to the Moon, your only option is to build a ladder," says Astro Teller, the captain of moonshots at X, formerly Google [x]. His point illustrates how short-term focus does not allow us to solve big problems. "Our goal is to produce as much value for the world as possible. Period," he says. "Purpose is the point. Profit is the result. It's the natural order of things. Greater value creation leads to more profit than trying to maximise profit as an endgame." Citing Google's annual economic report as an example, Tim O'Reilly, founder of O'Reilly Media and the Next: Economy Summit, a conference on technology and the future of work, iteratively talks about "companies creating more value than they extract".
Profit and purpose are force multipliers that reinforce each other. Two synergistic halves of a whole where the sum is greater than the parts. Reid Hoffman, co-founder of LinkedIn, says profit is structurally tied to LinkedIn's mission to create economic opportunity for every member of the global workforce. Ev Williams, co-founder of Twitter and founder of Medium, unapologetically wants both to change the world and to make money. In his view they are clearly complimentary.
"It's strange that people see them as a dichotomy," he says. "It's best if you have both. It would never be satisfying to me to build something that was successful in either of those dimensions, but not both. Profit allows you to reinvest in purpose." Williams's co-founder Biz Stone describes Twitter's purpose as "giving voice to the voiceless" and says that "Top talent is drawn to Silicon Valley because it's the place where they think they can maximise profit and purpose."
In Silicon Valley, where the war for top talent is notoriously brutal and professional promiscuity is the accepted norm for career growth and learning, attracting a star like Mike is gold precisely because it has an impact on the bottom line.
Great companies aren't great just because they make lots of money. They make lots of money precisely because they're great. This is becoming self-evident now that Mike and the millennials are putting these lofty hopes and ambitions within reach. Imagine a world that understands aligning purpose and profit is the art of business, and that this is the most powerful and authentic expression of free-market capitalism. Imagine a world that unlocks the higher side of our nature because we are working toward a higher purpose that is worthy of our life effort. Imagine a world where businesses compete on being best for the world, and where that is precisely what makes them the best in the world.
Julie Hanna is exectuve chair of Kiva and US presidential ambassador for global entrepeneurship